Invensys bids to cut debt by £1.5bn

INVESNSYS, the British engineering group that has axed thousands of jobs in a battle to restore its fortunes, is to chop £1.5bn from its debt pile by selling two businesses.

Unveiling the results of a strategy review under new Chief Executive Rick Haythornthwaite, Britain's biggest engineering company said it would sell its industrial components and systems units as it wrestles with debts of more than £3bn.

The firm, which issued two profit warnings last year as demand slumped amid a global economic recession, also announced a wider reorganisation of its other main businesses into two core divisions and the appointment of nine new executives.

'This is a new beginning for Invensys,' Haythornthwaite said. He added that Invensys had already had approaches from potential buyers for the two units on the block.

The group, which has a current workforce of over 70,000, said it had cut 11,000 jobs in the year ended September 2001.

Invensys' customers include washing-machine maker Whirlpool and Sweden's Electrolux, the world's biggest domestic appliance maker. Its products range from making controls for washing machines to setting up software systems.

Invensys said it planned to issue debt in the capital markets in 2002/2003 and said it had the full support of its banks for its strategy. Responding to speculation that Invensys is planning a rights issue, Haythornthwaite said: 'I don't like rights issues.'

The company reported 'mixed' trading in the second half but added it was confident of satisfying the requirements of its banking covenants at the end of the year. Invensys financial year runs to 31 March. Its £3bn debt is just below its equity market value of £3.7bn.